On July 1, 2021, Maria initially invested P200,000 cash into Maria Merchandising. On the same date, she paid P45,000 for six months rent on the store space, P10,000 for business licenses and permits, and P50,000 for various store furniture. She also bought P60,000 worth of office supplies on account with the intention to sell them at a higher price. However, the next day, the business received a P1,500 credit memo for allowance granted on the purchased merchandise. The supplies were bought from 123 Supplies Store on terms m/60. On June 6, the business bought from 45 Supplies Shop P5,000 worth of supplies to be used in the store on terms 50% downpayment, balance n/30.

Francisco, a part time employee, was able to sell on July 12 some of the stores merchandise to Mr. Y for P16,000 on terms 50% downpayment, balance 2/10, n/30. On July 24, the business sold to Mrs.

Z merchandise for P12,000 on terms 2/10, n/30. On July 30, Ms. X paid the business P42,000 for merchandise bought on the same day. Although Ms. X already paid for all the merchandise in full, she requested that some merchandise be delivered to her new business address sometime next month. At the end of the month, the business paid utilities totalling P4,920 and miscellaneous expenses amounting to P2,710.

Adjustments data are as follows:

a. Merchandise inventory as of July 31, 2021 is P8,500, based on physical count.

b. The P5,000 salary of Francisco for the month of July remains unpaid as of July 31, 2021

c. Store supplies unused as of July 31, 2021 is P1,800, based on physical count.

d. The P45,000 rental payment is applicable for the months of July to December 2021.

e. The July 30 sale to Ms. X included P15,000 worth of merchandise to be delivered in August.

f. The store furniture has an estimated salvage value of P5,000 and useful life of 10 years.

g. Doubtful accounts are estimated at 12% of outstanding customer accounts

INSTRUCTIONS:

Perform the following steps in the accounting cycle for Maria Merchandising:

1. Journalize the above transactions using both general and special journals. Assume a periodic inventory system. When journalizing, refer to the Chart of Accounts provided and ignore

source document reference number.

2. Post the transactions to general ledger.

3. Prepare the trial balance as of July 31, 2021

4. Prepare Work sheet as of July 31, 2021

5. Prepare the financial statements for the month ended July 31, 2021:

a.) Cost of Good Sold

b.) Multi-step Income Statement

c.) Statement of Changes in Equity

d.) Report form Statement of Financial Position

e.) Include any supporting notes to financial statements

6. Journalize and post adjusting entries

7. Prepare a post-closing trial balance as of July 31, 2021

Direction: Illustrate the entire accounting cycle of a merchandising business using the transactions of Maria Merchandising for the month of July. Below is the business's chart of accounts. MARIA MERCHANDISING Chart of Accounts Account Number Account Classification 001 Current Assets 031 Current Assets 032 Current Assets-contra 041 Current Assets 051 Current Assets 056 Current Assets 065 Non-current Assets 066 Non-current Assets - contra 071 Current Liabilities 075 Current Liabilities 076 Current Liabilities 101 Owner's Equity 111 Revenues 121 Cost and Expenses 122 Cost and Expenses - contra 131 Cost and Expenses 132 Cost and Expenses 133 Cost and Expenses 136 Cost and Expenses 137 Cost and Expenses 140 Cost and Expenses 145 Cost and Expenses 170 Cost and Expenses 180 Others Account Title Cash Accounts Receivable Allowance for Doubtful Accounts Merchandise Inventory Prepaid Rent Store Supplies Store Furniture Accumulated Depreciation-Store Furniture Accounts Payable Salaries Payable Unearned Sales Maria Lopez, Capital Sales Purchases Purchase Returns and Allowances Utilities Expense Salaries Expense Rent Expense Taxes and License Expense Store Supplies Expense Depreciation Expense - Store Furniture Doubtful Accounts Expense Miscellaneous Expense Income Summary The business transactions for the month of July are provided below